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China issues new policy to boost foreign trade

Early this year, the Government of China (GOC) set a target of 7.5 percent growth for imports and exports in its annual work report. China's foreign trade has fallen far short of these targets so far this year. In the first four months of 2014, for only the second time in the past decade, China's imports and exports both declined. The value of China's exports dropped 4.8 percent and the value of China's imports dropped 1.2 percent. The total value of imports and exports dropped 3.1 percent. To reach the 7.5 percent target, the value of China's imports and exports would have to maintain an average year-on-year growth rate of 11.3 percent from May through December.

In light of the slowing pace of foreign trade, the Ministry of Commerce of China recently joined forces with 16 other relevant central government agencies to draft a new policy document, Several Opinions of the General Office of State Council on Supporting Stable Growth of Foreign Trade (Guo Ban Fa (2014) No. 19) ("Opinions"), which was published on May 15 and aims to boost China's imports and exports.

The Opinions set forth policies in four areas. First, the Opinions call for optimizing China's structure for foreign trade, by encouraging imports of advanced technology and equipment and goods closely related to people's livelihood, maintaining stable growth of goods trade, supporting development of service trade, and displaying the role of trade in "going global." Second, the Opinions call on the GOC to improve the trade environment by improving trade facilitation, streamlining the inspection of imports and exports, standardizing fees related to imports and exports, and improving responses to trade frictions. Third, the Opinions seek to strengthen "policy guarantees" for foreign trade, calling on relevant agencies to optimize mechanisms to pursue a market-based RMB exchange rate, promote RMB-based settlement in foreign trade, improve the availability of financing services for companies that import and export, increase export credit insurance support, and accelerate the export rebate process. Finally, the Opinions call on the GOC to support the development of all kinds of companies engaged in foreign trade, and create and improve various services to assist such companies.

Calling for prompt and effective implementation, the Opinions specify the responsible agencies for each identified measure. The 17 drafting agencies have already set up clear timetables for implementation. Local governments are also expected to issue supporting measures in order to promote the participation of their own jurisdictions in foreign trade.